Look at the chart above. You can see the entry day in green. I was looking for a bounce back up to the most recent high (referenced by the horizontal green area). But, we didn't get that.
Instead the stock went SIDEWAYS. For a long time. This really killed my trade. As you can see, the stock never hit my stop until about 3 days before it's expiration. I looked to get out of the trade and by then I could have only sold my call option for $0.05 - basically worthless. Not worth taking action on. At that point I had a "lottery ticket" and my only hope was for some type of news that would pop this thing way higher - very very long odds, but by this point, I really had no other option.
There's 2 lessons to learn from this:
1. Stocks don't only go up and down - they also go sideways. So if you are an options trader like myself the sideways stuff makes the option price go down and just like this example, my option expired worthless. Nada, zip, nil, zilcho. Therefore I had a 100% loss (i.e. read "not good").
2. The 2nd lesson is this. IF, you still happen to be in a trade and you are 2 weeks away from expiration with no real movement - then GET OUT. If I would have gotten out 2 weeks prior then I would have exited by selling the option for $0.97. Now, this STILL would have been a loss, but a much less of a loss (approx $100 less of a loss).
I bought this option for $1.55 and could have sold it for $0.97, thereby my loss would have been $0.58 for an ROI% of NEGATIVE 37% vs. a $1.55 loss with an ROI% of NEGATIVE 100%.
So, you can see that the last 2 weeks really kills the value of your option. I'll take a 37% loss over a 100% loss any day.
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